Mail Ru Group Ltd : Mail.Ru Group Limited Unaudited IFRS Results for H1 2013

Mail.Ru Group Limited Unaudited IFRS Results for H1 2013

05.09.2013

5 September 2013.  Mail.Ru Group Limited (LSE: MAIL, hereinafter referred as "the Company" or "the Group"), one of the largest Internet companies in the high-growth Russian-speaking Internet markets, today releases unaudited interim condensed consolidated IFRS financial statements and provides the following unaudited segment financial information and key operating highlights for the six months ended 30 June 2013.

H1 2013 Performance Highlights

- H1 2013 Group aggregate segment revenue grew 28.4% Y-o-Y to RUR 12,442 million. Q2 2013 Group aggregate segment revenue demonstrated 27.3% Y-o-Y growth

- H1 2013 Group aggregate segment EBITDA grew 26.1% Y-o-Y to RUR 6,706 million

- H1 2013 Group aggregate net profit grew 27.6% Y-o-Y to RUR 5,063 million

- Net cash position as of 30 June 2013 was RUR 6,818 million

- Monthly audience(TNS Russia) of Mail.Ru portal in June 2013 reached 33.2 million Russian users

Key Recent Developments

- Email & portal

• Email for business - free email service for your domain powered by Mail.Ru
• Email iOS app and mobile web version allow users to manage multiple Mail.Ru accounts
• Update of Android app with interface improvements
• Launch of Cloud.Mail.Ru (closed beta) with 100GB of free cloud storage and file syncing clients for Windows, Mac, iOS and Android
• Calendar.Mail.Ru released mobile app for Android
• Complete redesign of Sport.Mail.Ru project

- Social networks

• OK launched video 2.0 with new back-end, new design, and new services
• Launched achievements system rewarding users for different activities in OK
• Improved news feed, search and security algorithms for OK
• Introduced notification center, people tagging in statuses, polls, video upload, multichat and achievements across all mobile platforms in OK
• Updated OK applications for iOS and Android featuring native photos, discussions and sidebar navigation
• My World launched Groups service, ability to simultaneously publish photos, text and music
• Launched My World application for Android and updated application for iOS featuring improved navigation, multiple photo upload and photo filters

- Instant messaging

• Free and paid stickers in Mail.Ru Agent for iOS and Android
• Video-calls in Mail.Ru Agent for iOS (in addition to Android)
• Released Mail.Ru Agent application for Windows 8 featuring voice and video calls, group chat, photo/video/file sharing

- Online games

• Launched mobile game Jungle Heat on Android. The game's been featured on Google Play Games in Japan, Korea, USA, Australia and several other countries
• Launched mobile game Poker Arena on iOS and Android
• Warface continues to gain traction in terms of both users and revenue
• Pirate Code is catching up to our Top-5 revenue generating games - a successful story of porting social game to web platform

- Search & E-Commerce

• Mail.Ru Group's proprietary search engine provides all search results since July 1, 2013
• Search market share was 8.8% in July 2013 (LiveInternet)
• Search index volume has grown from 5 to 10 billion documents
• Signed search monetization agreement with Yandex

- Corporate

• Mail.Ru Group Moscow team moved to new Headquarters building in June 2013
• Mail.Ru Group disposed of its remaining 14.2 mln Facebook shares in the period of July-August 2013 yielding proceeds  in excess of $525m
• Launched non-profit platform Dobro.Mail.Ru for charity crowd-funding 

Commenting on the results of the Group, Dmitry Grishin, Chairman and CEO of Mail.Ru Group, said:

"I am pleased to report that our company has had another successful period with Mail.Ru Group meeting or exceeded all key performance indicators, and hence delivering strong growth across all segments - email & portal and instant messaging, social networking, online games and search & e-commerce. Compared to H1 2012, Group aggregate segment revenue increased by 28%, reaching RUR 12,442 million and Group aggregate segment EBITDA rose 26% to RUR 6,706 million.

As previously indicated display advertising growth rates saw an improvement in Q2 as the one time effects seen in H2 2012 dropped off through Q1. Contextual advertising continues to be strong supported by both our solid market share in search and an increased focus on the Target product.  Community IVAS continues to show solid growth with the main driver of this being the increase of paying user engagement - especially in virtual gifts and services, as well as in our API platform and self-developed social games.

Evidenced by continued Y-o-Y growth in H1 we continue to execute on our MMO games strategy. Warface has been an important component of this and has seen an increasing traction in terms of both user and revenue, and has remained our top revenue generating game in Q2.

Despite the incremental costs of our new offices we continue to focus on profitability and maintain tight cost control.  As a result, even taking into account the increased office costs we have delivered an EBITDA margin of 53.9% compared to 54.9% in H1 2012.

The structural drivers of our business remain unchanged and hence we look into H2 2013 with confidence.  Given the strong first half of our year and our continued delivery we are increasing our FY 2013 guidance and now expect to see FY 2013 RUR Group aggregate segment revenue growth of 27-29% with contextual advertising and games showing the fastest growth.  Despite the effect of the new offices we continue to keep tight control over costs and hence expect that a FY 2013 Group aggregate segment EBITDA margin of between 53-54%."

Conference Call

The Mail.ru Group management team will host an analyst and investor conference call at 14.00 UK time (17.00 Moscow time, 09.00 U.S. Eastern Daylight Time), on Thursday, 5th September 2013, including a Question and Answer session.

To participate in this conference call, please use the following access details:

For Further Information Please Contact:

Investors:

Matthew Hammond

Chief Financial Offficer

Mail.Ru Group

Phone: +971 505 56 1315

E-mail: hammond@corp.mail.ru

Press:

Ksenia Chabanenko

Phone: +7 916 0906626

E-mail: ks@corp.mail.ru

Cautionary Statement regarding Forward Looking Statements 

This press release contains statements of expectation and other forward-looking statements regarding future events or the future financial performance of the Group. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "forecast", "intend", "will", "could", "may" or "might",  the negative of such terms or other similar expressions including "outlook" or "guidance".  The forward-looking statements in this release are based upon various assumptions that are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and may be beyond the Group's control.  Actual results could differ materially from those discussed in the forward looking statements herein.  Many factors  could cause actual results to differ materially from those discussed in the forward looking statements included herein, including competition in the marketplace, changes in consumer preferences, the degree of Internet penetration and online advertising in Russia, concerns about data security, claims of intellectual property infringement, adverse media speculation, changes in political, social, legal or economic conditions in Russia, exchange rate fluctuations, and the Group's success in identifying and responding to these and other risks involved in its business, including those referenced under "Risk Factors" in the Group's public filings.  The forward-looking statements contained herein speak only as of the date they were made, and the Group does not intend to amend or update these statements except to the extent required by law to reflect events and circumstances occurring after the date hereof.

About Mail.Ru Group

Mail.Ru Group (LSE:MAIL, listed since November 5, 2010) is a leading Internet company in the high-growth Russian-speaking Internet markets (Russia is Europe's largest Internet market measured by the number of users, comScore). Mail.Ru Group's sites reach approximately 85% of Russian Internet users on a monthly basis (comScore, June 2013) and the Company is the sixth largest Internet businesses globally, based on the number of total pages viewed (comScore, June 2013).

In line with the 'communitainment' (communication plus entertainment) strategy, the Company is moving rapidly to build an integrated communications and entertainment platform. The Company owns Russia's leading email service and Russia's largest internet portal, Mail.Ru (TNS, all Russia, age 12-64, June 2013). The Company operates two of the three largest Russian language social networks, Odnoklassniki (OK) and Moi Mir (My World), and Russia's largest online game business. The Company's portfolio also includes Mail.Ru Agent and ICQ - two instant messaging services popular in Russia and CIS.

The Company holds minority equity stakes in VKontakte (39.99%) and Qiwi (15.04%). The Company also holds a number of small venture capital investments in various Internet companies in Russia and Ukraine.